As members of the public and patentees, we all should have an interest in improving patent examination, and thus patent quality. We should favor correct examination at the outset rather than trying to address a wrongly granted patent after issuance – when both the burden of proving invalidity and the cost of doing so are higher and the public has already expended considerable resources avoiding infringement.

For 21 consecutive years, IBM has been the leading recipient of US patents and, through-out this period, we have consistently supported efforts to advance and enable robust pat-ent examination. We organized the Peer to Patent pilot project, in conjunction with New York Law School and the USPTO that demonstrated the feasibility of crowdsourcing prior art, and was particularly effective at identifying non-patent technical literature. We promoted the third-party submission of prior art provisions of the America Invents Act to enable the benefits of crowdsourcing prior art to become part of the examination process for all patents. In addition, we have for several decades published technical journals and documentation — including the IBM Technical Disclosure Bulletin — that are among the non-patent technical literature most widely cited by patent examiners during patent ex-amination. Finally, we have long cooperated with the USPTO in providing technical education for patent examiners and we will continue to do so.

The patent system benefits us all by promoting innovation. We call on other users of the patent system to join IBM in supporting and assisting the USPTO in enhancing the qual-ity of patent examination.

“In another moment down went Alice after it, never once considering how in the world she was to get out again.” — Lewis Carroll, Alice’s Adventures In Wonderland

This spring in Alice v. CLS Bank, the Supreme Court will once again confront the issue of patent eligibility, this time asking whether computer-implemented inventions are the types of innovations our patent system should protect. It may seem curious–or ‘curiouser and curiouser’–to many that the Court feels the need to address this issue after over a half century of breakthrough software inventions backed by software patents. But the Court seems particularly focused on the question of eligibility. In fact, Alice is the fourth time in as many years the Court has heard appeals asking whether inventions ranging from isolated DNA to business methods can be protected by patents.

We believe the Court is revisiting the issue of patent eligibility because it is struggling to formulate a workable test. The patent statute has no limitations on patent eligibility, as long as an invention is directed to a machine, product, process, or chemical composition it is eligible for patenting. Over the years, the Supreme Court has created exceptions for laws of nature, natural phenomena, and abstract ideas. It is the last exception that is relevant to computer-implemented inventions — i.e. is this invention ineligible because it is an “abstract idea”?

In IBM’s amicus brief in Alice, we argue that the abstract idea test doesn’t work for computer implemented inventions. The Court has not provided guidance on how to identify a patent ineligible abstract idea, and thus lower courts, the PTO and the public can not consistently apply the test. In the present case, this confusion resulted in multiple opinions (with no majority) spanning over one hundred pages at the Federal Circuit, despite that court’s decision to hear the case en banc. A closer look at the types of concerns raised by certain computer implemented inventions reveals that the non-obviousness requirement would be a more appropriate vehicle to address these concerns, because the inventions are in fact old methods implemented on computers using conventional means — embodying nothing truly new. More importantly, when properly understood, computer-implemented inventions are never really abstract because they are implemented on a machine.

Computer implemented inventions, particularly in software, form the basis for innovation not only in the technology products we use every day, such as laptops and smartphones, but in everything from cars to surgical techniques to innovations that increase efficiency and production in factories. Strong and effective patent protection for these innovations in the U.S. has fostered a fertile environment for research and development and, as a result, the US is the undisputed leader in the software industry. We stand at the threshold of a new era of cognitive computing—ushered in by advances such as IBM’s Watson — in which machines will learn, reason and interact with people in more natural ways. Patents have helped fuel the software breakthroughs we rely on today, and will help spur the innovations of tomorrow. We hope the Court — and the patent community — will consider our future as we address the fundamental issue of what our patent system is and should be designed to protect.

Additional perspective about IBM’s stance on software patents and CLS Bank amicus brief can be found at:

At long last, the Government Accountability Office (GAO) has submitted its report on patent litigation to the Committees on the Judiciary of the US Senate and House of Representatives, as authorized under the America Invents Act (AIA). Unfortunately, the report is a day late and a dollar short. Actually, the report is more than a day late – the AIA required that the GAO submit its report within 1 year of its enactment. The AIA was enacted in 2011. The report is also more than a dollar short – the GAO ignored Section 34 of the AIA which specified the contents of the study (namely patent litigation initiated by Non-Practicing Entities (NPEs)), choosing instead to focus on a set of issues not within its Congressional remit.

First, let me provide some context. In general, the report furthers the public dialogue on patent litigation, which is always helpful. So too is its focus on patent quality, and the need to improve patent claim clarity to make it easier for us all to understand the boundary between infringement and non-infringement. But in summarily reaching the surprising conclusion that NPEs are not the main cause of the increase in patent litigation, the GAO inexplicably turned its attention to an issue of its own manufacture, namely software patents.

As stated above, the GAO was not even asked to look at software patents….with good reason. Software patents – no matter how defined – should be judged against the same principles of patentability as any other patents. Patents should be granted for inventions that satisfy the criteria for patentability regardless of technology. Technology-specific requirements for patentability risk subjecting our patent system to the same special interests that distort our tax code. The patent system is intended to promote all innovation, not favor one type of innovation over another.

Assuming for the moment that we wanted to single out software patents as a topic for study, the GAO applied a deeply flawed categorization to determine what is and is not a software patent. The GAO report concluded that more than half of recently issued patents are for software. It appears the GAO essentially considered every patent relating to electrical technologies to be a software patent. But many new methods of operating electrical devices are embodied in device hardware, not software; accordingly, the GAO’s conclusions on how many software patents have issued, and the inferences the GAO draws from those conclusions, are highly questionable.

With their erroneous conclusions as a base, is it any wonder that the GAO found software patents to be the subject of a substantial portion of patent litigation? Is it any surprise that the majority of shoppers in grocery stores located in New York are residents of New York? Furthermore, the study assumes all patent litigation is bad and implies something is wrong with any patent involved in litigation, but we know that is not true. Some infringers will not voluntarily license a valid patent, and some licensors and licensees can not reach agreement on royalty rates. Litigation has long had, and will continue to have, a key role in protecting and enforcing patent rights. Perhaps the GAO should have done what it was instructed to do and focused more attention on litigation abuse, not the mere volume of litigation.

We need to maintain our perspective. The software industry is among the most innovative and successful of all industries worldwide. See the graphic below courtesy of the Business Software Alliance.

Most of the leading software companies are US owned and based, which is due in part to the strong protections for investment and innovation that are provided by software patents in the US. We should think long and hard before we abrogate the protections to the US software industry provided by US patents. Our nation’s economic future, and even our jobs, are at stake. The success of the software industry and the importance of patents in protecting software innovation are well documented. See for example the works of Columbia Law Professor Ronald Mann. See also my previous articles published in Wired and Smartplanet.

As for NPEs, the GAO downplayed their impact, focusing instead on the total number of patent infringement lawsuits. But as we previously reported in our earlier blog entry, NPEs are clearly the source of real growth in patent litigation. See the graph below from Patent Freedom, indicating that the number of counterparties (defendants plus declaratory judgment plaintiffs) in patent suits involving NPEs has increased at a compound annual growth rate of over 30% during the last decade:

The GAO report glosses over this fact with only a brief reference to accounting by number of defendants buried deep in the report. But make no mistake about it – the NPE business model, not software patents, is the main reason patent litigation has increased.

One final point. NPEs often assert patents against products and services that include software. We can debate why that is…maybe infringements are easier to discover given publication of user manuals, redbooks, and the like on the internet…but that debate would overlook a more fundamental point. Implementing patent reforms specific to software, even if successful in reducing litigation relating to software patents, will not solve the patent litigation problem. NPEs will simply assert more patents relating to other technologies – we’re already starting to see this. It is fine to try to pinpoint the root cause of patent litigation, but our reforms should be targeted to specific issues and universal in scope, based on principles and behaviors, rather than specific technologies.

As the leading recipient of U.S. Patents for 20 consecutive years, we take pride in knowing that over the last 20 years the innovative talents of IBM inventors have generated thousands of original ideas and inventions that will enable fundamental advancements in technology and society. We are also proud because we believe patent leadership comes with a responsibility to continuously strive to improve the patent system, and we have taken many steps with a goal of fulfilling that obligation.

Patent leadership is an important reflection of IBM’s commitment to R&D and innovation. We believe our role as a leader places us in a unique position to help shape the patent system in the U.S. to promote innovation. Of course, this is a task that is never truly finished.

Among the steps we’ve taken were to unilaterally commit to raise the bar on the technical content of business method patent applications; organize the Peer to Patent project to validate the ability of the public to assist patent examiners in identifying prior art (a capability now codified in the America Invents Act); promote open innovation by pledging not to assert our patent rights in select areas of societal importance such as open source software, health care, and the environment; and demonstrate how metrics can be used to improve patent system transparency. We have also submitted numerous amicus briefs urging courts to interpret the law so as to best encourage innovation.

These were not actions that promoted our self interest or favored our short term business prospects. We believed, however, that they were in the long-term interest of the health of the patent system and that what is good for innovation is ultimately also good for IBM. That is why we continue to strive to optimize the patent system for all constituents.

Today, with many pundits arguing for the elimination of patents relating to software, we are advocating for the need to continue to protect this pervasive platform for innovation, and pointing out the inconsistency of protecting processes implemented mechanically or electrically (but not protecting the same processes implemented using software).

While some may question our motives, we will continue to take actions that we believe aid the patent system in fulfilling its objective of promoting innovation. We view that as one of the responsibilities of patent leadership.

One message transcends political parties, national borders, and enlightened corporate boardrooms. Innovation is critical to economic growth and economic growth is critical to our future.

IBM, through its 12 research labs on 6 continents and its global development efforts has, for decades, been committed to innovation in a broad range of technologies. This dedication is reflected in IBM’s $6 billion annual investment in fundamental research and development.

And it is also reflected in a recent announcement that, for the 20th consecutive year, IBM leads in U.S. patent grants. In 1992, IBM edged out the prior year’s leader Toshiba and has led in U.S. patents ever since. In 2012, IBM was granted a record 6,478 patents.

But the real message is how IBM’s innovation, growth, and valuable patents are intertwined. A robust portfolio of patents enables IBM to exchange (or cross license) with others who have patented inventions that IBM may wish to access. This provides IBM with “freedom of action” in developing technologies for its offerings and, in some cases, royalties which can also be re-invested in further innovation. And, by making patented technology available to others, we often see the market expand for all, resulting in greater benefits for IBM, customers, and the industry.

In some instances, innovative patented technology cultivates new industries. Consider the IBM Watson innovation of Jeopardy! fame. The Watson computerized “contestant” understood complex and nuanced clues and derived a desired result in the TV game show Jeopardy!. Years of research and re-work resulted in innovative algorithms and processing methods that leapfrogged existing technology. Well, the Watson computer system has been adapted to innovative health care and other sophisticated applications. With patents, new opportunities have followed.

Patents provide IBM with the assurance that others will not dissect the Watson computer system and cancel the value of time, effort, and investment made, and they are an important part of the incentive to create the next Watson computer system. So, Watson innovation, protected by patents, is driving new markets, new product value, new jobs, and new choices for the public, contributing to IBM’s product, service and IP licensing returns, which can be invested to further fuel R&D. Similar synergies can be told about other recent IBM innovations ranging from semiconductors and nanotechnology to Smarter Planet solutions.

In achieving U.S. patent leadership, IBM recognizes the need for quality as well. Which is why IBM has led in supporting measures allowing questionable patents to be challenged. Improvidently granted patents adversely impact not only makers and users of products, but also the holders of sound patents. Not all patented inventions are game-changing breakthroughs — most inventions are incremental advances on which further inventions are made. But granted patents should satisfy the Constitutional promise of “promoting …progress in…the useful Arts” as reflected in U.S. laws.

The interplay of innovation, growth, and patents has placed the world’s information at our fingertips. IBM is proud of the inventors and innovators who contributed to this landmark of two decades of patent leadership and more importantly the role they have played in making our world a better place.

As the patent community attempts to navigate the complex set of rules associated with new proceedings under the America Invents Act that enable challenges to issued USPTO patents, there is a simpler and potentially more effective way to improve patent quality — submitting prior art references as a third party under the pre-issuance submissions provisions. The provisions are designed to improve the third party submissions process to enable higher quality, more efficient patent examination. Yet, key features of these new provisions are often overlooked and, upon closer evaluation, it’s evident that taking advantage of these provisions is a good idea.

Under prior law, a third party could submit a prior art reference to the USPTO, but could not include an explanation of its relevance to a pending patent application without the consent of the applicant. A third party was thus discouraged from making a submission out of fear that a patent examiner would not recognize the significance of a submitted reference to a patent application and issue a patent anyway. The America Invents Act now requires a third party to submit an explanation of the relevance of a prior art reference, thereby improving the likelihood that a patent examiner will recognize how it relates to a patent application to the fullest extent possible. A prior art reference already identified to the USPTO by an applicant may even be a candidate for a submission: for example, it may have been incompletely or inaccurately characterized and submitting it with a statement better characterizing its relevance may help a patent examiner apply it correctly.

In considering whether to make a third party submission of prior art, one must still weigh the opportunity to eliminate or narrow claims of a patent against the risk that a patent will be strengthened because a submitted reference will be “of record.” That is, if the reference is considered by an examiner and recorded in the patent file, but the claims are unaffected, it may be more difficult to bring a successful challenge to those claims based on the same reference after a patent issues, as compared to a reference the examiner never considered. Some organizations opt to withhold references to save them for later use upon assertion of a patent against them. Although a reference may have more value after patent issuance if it had not been previously considered by a patent examiner, submission of a reference during patent application examination allows it to be considered by the patent examiner without having to overcome the “clear and convincing” standard for proving patent invalidity that will apply in court once a patent issues.

Other benefits of a pre-issuance submission are also worth considering. As members of the public and patentees, we all have an interest in improving the efficiency of patent examination. Once applicable prior art references are made available to patent examiners they are apt to perform a better examination not only on the patent application then under examination but with respect to later patent applications relating to the same technical area because the examiners will add the references to their arsenal of applicable prior art. In this way the benefits of active public participation promise to enhance the quality of patent examination generally and not just for a specific patent application for which a reference was submitted. We should also favor getting examination correct at the outset rather than trying to fix a problem later (after patent issuance) when the expense of doing so increases significantly and the burden of proof may be higher. Even if a post-issuance challenge is successful, during the interim the public is needlessly forced to concern itself with a meritless patent.

Like this:

Last September, years of effort by the patent community led to passage of the America Invents Act (AIA). The AIA’s sweeping reforms include significant changes to patent office practice, new definitions of prior art, and fee-setting authority for the U.S. Patent and Trademark Office (USPTO). These reforms have the potential to enhance and transform USPTO operations and, in turn, improve the patenting experience for inventors.

While the USPTO and the public are currently tackling a daunting array of rules packages to implement the AIA, the USPTO’s proposed fees have come under attack — from within the patent community. It is disappointing that users of the patent system would oppose the USPTO’s authority to recover its costs, yet nevertheless expect the patent office to fulfill its expanded responsibilities under the AIA .

There is no dispute that the USPTO should have sufficient funding to operate efficiently and effectively. During the years of wrangling over more controversial elements of the AIA, the vast majority of stakeholders agreed that USPTO fee diversion should be prevented. The AIA doesn’t go that far, but it does give the USPTO the power to set fees, a power that was also widely supported (particularly if the USPTO could keep those fees). The USPTO also succeeded in obtaining an appropriation from Congress sufficient to recover its fees, so it seems that for this fiscal year at least, the stars have aligned.

Under the AIA, the USPTO is required to set fees to recover aggregate costs. In an initial fee proposal, the USPTO did just this, with some adjustments designed to encourage certain activities such as filing new patent applications. While some have raised concerns over whether the method for calculating costs or the value proposed for the USPTO reserve fund is optimal, few dispute the USPTO’s goals in establishing them, i.e. to effectively and efficiently examine patent applications and review issued patents.

The USPTO has already put in place a number of procedures required by the AIA, such as accelerated examination and the new threshold for granting inter partes reexamination. In the upcoming months, the USPTO will begin to conduct an array of new post-issuance proceedings. Just as the patent community should have the opportunity to provide input on how these new procedures and proceedings work, we also need to work with the USPTO on how much they should cost. Sufficient funding at the right stages of the patent process is a requirement for a well-functioning patent system.

Members of the public should be encouraged to share views regarding specific fees proposed by the USPTO as part of the overall framework for the USPTO to recover its costs. As this process moves forward, the USPTO is expected to publish a final proposed fee schedule in June so the public can submit comments directly to the USPTO. By doing so, those with concerns about the fees should constructively engage in the fee setting process to help the USPTO help itself. But we shouldn’t expect the USPTO to get the job done without the fees.